New Delhi, November 27
India Inc is gearing up for another bolt from the falling value of rupee on their quarterly report card, after forex losses knocked down a significant part of their profits in the second quarter. A number of companies, including some blue-chips, suffered huge losses due to the rupee depreciation during the second fiscal quarter ended September 30, 2011, and experts have warned that a similar situation might be repeated in the third quarter ending next month.

Since January, the rupee has plunged by about 18% from near 44-level against the US dollar to a record low of below 52-mark. A number of companies, including drug-maker Ranbaxy, JSW Energy, JSW Steel, Tata Motors, Bharti Airtel, PFC and Jet Airways felt the heat of forex losses in the second quarter.

Brokerage firm Bonanza Portfolio's senior research analyst Shanu Goel said the sharp currency moves could adversely affect the companies' third-quarter results as well. "The Q3 results are also expected to be adversely affected by the sudden currency movement," he said, while noting many companies saw their profits falling during the second quarter due to forex losses.

To ward off the losses, the companies might have to hedge their forex risks, but that would also put some pressure on their balance sheets, the experts believe.

Hit by foreign exchange losses, Ranbaxy posted a net loss of Rs 464.58 crore for the quarter ended September 30, 2011. The company's combined foreign exchange loss during the quarter stood at Rs 651 crore. JSW Energy also reported a Q2 net loss of Rs 110.51 crore due to forex losses among other factors.

Other companies, whose profits were impacted during the second quarter due to fall in the rupee value, included Sesa Goa, JSL Stainless, SAIL, Sterlite Industries.

Last Tuesday, the rupee hit a record low of 52.73 against the US currency, as investors exited from riskier emerging markets as well as eurozone assets, and shifted funds to the greenback —seen as a "safe heaven" in times of crisis.

Market observers feel that rupee may even touch 55 per dollar in the near term, but can stabilise near 50-52 level if the Reserve Bank intervenes to contain the depreciation.

Since the Indian economy is dependent on imports of both crude oil and essential commodities from international markets, a depreciating rupee will lead to increased import bills for the nation, they said. This in return will lead to higher cost of goods produced and higher inflation in the nation which is already facing inflationary pressure, the analysts believe. — PTI

Mumbai, November 27
Nine of the top 10 companies in the 30-share BSE Sensex index lost Rs 66,415 crore in combined market capitalization during the week gone by, with Reliance Industries Ltd the worst hit.

Among the 10 most-valuable companies in the Sensex, Coal India Ltd was the only firm to buck the losing trend to see a rise in its market value. The company's m-cap jumped by Rs 6,632 crore to Rs 195,049 crore during the trading week ended November 25.

Even after the sharp loss in market worth, RIL remained the most valued company in the country at the close of the trading week, while state-run oil and gas exploration firm ONGC held on to second position. TCS emerged as the third-most valued company, while CIL was at fourth place, followed by ITC, Infosys, Bharti, NTPC, SBI and HDFC Bank, in that order.

RIL saw the maximum erosion in market wealth during the past week. The company witnessed a Rs 17,698 crore dip in its market value, which stood at Rs 2,46,885 crore on Friday.

ONGC's m-cap also dropped by Rs 6,331 crore to Rs 215,470 crore. Software companies TCS and Infosys together lost Rs 12,888 crore in cumulative market valuation. TCS’ m-cap stood at Rs 208,042 crore, while Infosys' was Rs 149,327 crore at the end of the trading week.

In addition, ITC saw its m-cap slip by Rs 7,700 crore to Rs 149,527 crore, Bharti Airtel's market value was eroded by Rs 8,639 crore to Rs 142,369 crore and that of NTPC dropped by Rs 4,824 crore to Rs 129,412 crore.

SBI's m-cap skidded by Rs 2210 crore to Rs 107,359 crore while HDFC Bank lost Rs 6,125 crore. — PTI

Mumbai, November 27
The leading research firm Centre for Monitoring Indian Economy (CMIE) has scaled down its GDP forecast by a notch to 7.8 per cent for this fiscal from the earlier forecast of 7.9 per cent.

"A sharp downward revision in the forecast for the mining index from 4.4% to 3.2%, manufacturing sector from 7.5% to 6.9% and electricity from 9% to 8.7% has led to a further decline in our GDP forecast for this fiscal from 7.9% earlier to 7.8%," CMIE said in its monthly report.

Earlier, the RBI had also lowered its forecast for real GDP growth sharply from 8 to 7.6%. Rating agency Crisil also revised its growth estimate from 7.7-8% to 7.6%.

"The data releases continue to bring in news of an economy that seems to be in trouble. The index of industrial production growth has slowed down to 2-4% and the wholesale price index-based inflation growth has remained riveted to 9.5% in spite of the RBI’s sustained efforts to rein in inflation by raising interest rates," CMIE said. — PTI

New Delhi, November 27
The country's second largest foreign lender HSBC today said it is "cautiously optimistic" about its future growth prospects in the country in the wake of the ongoing sovereign debt crisis in the Eurozone economies and a possible slow growth of the domestic economy.

"We expect it (global economy) to quite a bit unsafely over the next six months, until the resolution of the European problem. We’ll be certainly worried about that. But, we are confident about India's long-term growth story. We will continue to invest here. In short, I can say, we will be cautiously optimistic," HSBC India chief executive Stuart A Davis told PTI here.

He also said the bank will pursue organic route for its growth here. "There’s a great opportunity for organic growth and we will continue to invest strongly in organic growth here," he said without divulging any specifics.

It can be noted that the British lender is yet to secure the Reserve Bank go-ahead for its proposal to buy out RBS India's retail assets and commercial businesses.

HSBC had agreed to acquire the Royal Bank of Scotland (RBS) Group's retail and commercial banking businesses here in July 2010 involving portfolios with a gross asset value of US $1.8 billion as estimated by the end of FY10. HSBC had also acquired IL&FS InvestSmart in 2008, which is now HSBC InvestDirect, with over 130,000 customers with outlets across 52 cities.

Referring to operation of foreign banks in the country, Davis said, the regulator is quite clear about the requirement for financial inclusion and priority sector lending and banks are complying to these guidelines.

HSBC has a presence in 88 countries and is slowly scaling up its operation in India, which is the seventh largest contributor to the British lender's global turnover. — PTI

New Delhi, November 27
A rider in the multibrand FDI policy which mandates 30 per cent sourcing by retail chains like Walmart from the micro and small enterprises (MSEs) may be more helpful to the Chinese rather than Indians, industry fears.

Small industries have raised serious concerns over the fine prints of the controversial policy, which gives liberty to the foreign players to source 30 per cent of their requirements from MSEs anywhere in the world.

The fear is more with regard to China with which India is already running a huge trade deficit of US $20 billion (about Rs 1.05 lakh crore) as Chinese goods are predominant in the Indian markets.

"China has done nuisance for us. And after this (the foreign direct investment policy) it will become more difficult for us," president of Federation of Indian Small & Medium Enterprises (FISME) V K Aggarwal told PTI.

He said the issue had come up in the meetings of the Planning Commission with the industry, where it was stressed that India should seek FDI in multibrand retail on its own terms and model like the Chinese have done to foreign investors.

"This (the policy) has come as a shock to us. It makes no sense at all. Indian government is not supposed to take care of the MSEs of entire world," Aggarwal said.

In the cabinet decision of November 24, the overseas players have to do 30 per cent of their sourcing from MSEs which however "can be done from anywhere in the world and is not India specific".

The only condition is that these MSEs must not have more than $1 million (Rs 5 crore) investment in plant and machinery — in line with the Indian MSME Act.

However, the government has said that the language of the policy has been framed in such a way that it should not violate India's WTO obligations. — PTI

fter passing out of B-school, Ritesh opted to work in an upcoming broking house in south Mumbai at a salary package of Rs 4 lakh a year. Over and above his remuneration he was to get incentives if he managed to meet his sales target. He shifted to Mumbai with his friend Mayank and shared an apartment in the city suburbs. Mayank’s job was in the finance department of a big FMCG company listed on the stock exchange. He was offered a package of Rs 3.6 lakh per annum.

After joining their respective firms the two opened a salary account. On opening of his bank account Mayank got a call from the bank asking whether he wanted to be issued a credit card. He readily agreed and gave all the documents to the bank for getting the card. In a span of some 15 days he got his first credit card.

Ritesh also thought of getting a credit card for himself. He applied for a card on the bank’s website and very soon he also got a call from the bank. He then submitted all the documents. Surprisingly, his application was rejected and the bank decided not to issue him the credit card. Ritesh was quite surprised as Mayank had managed to secure a credit even though the latter had a lower salary package.

Credit history of borrowers

This is a very common problem faced by many people when they apply for a credit card and they do not get one even though they have a decent salary package.

Whenever one applies for a credit card or any kind of loan, the bank or nonbanking financial institution gets a report from Credit Information Bureau of India Ltd (CIBIL). The latter is India’s first credit information bureau that collects data from various banks and NBFCs across India about the payment history of individuals for the loans or credit card issued to them. The bank always refers to this report to find out about the payment track record of a person.

What went wrong against Ritesh in this case was that he had never taken a loan or a credit card from any bank till date. So he did not have any record with CIBIL. Since the bank did not have any knowledge about his payment history it was skeptical about issuing him a credit card.

Then how come Mayank was issued a card? Even he never had taken out a loan and this was the first credit card he was issued.

Generally banks have a list of companies that they categorize in the ‘A', ‘B’ or ‘C’ list. Luckily the FMCG firm that Mayank was working with was an ‘A’ category company, according to the bank. Banks are always more than happy to serve people who are working with companies in this ‘A’ category. Getting a card when you are working with a ‘B’ or a ‘C’ listed company is comparatively tougher.

The problem for Ritesh does not only stop at securing a credit card - it will continue even when he applies for a personal loan or any unsecured loan. Even if the bank agrees to give a personal loan to him, the rate of interest would likely be much higher than what Mayank would get.

For Ritesh then it was typically a "chicken and egg" problem. He was not being issued a credit card because he never had one.

Building your credit score

Various banks offer credit cards against their fixed deposits. These cards have a credit limit of around 60 per cent of the value of the fixed deposit. To generate a track record you should open a fixed deposit with the bank and then take a credit card against it. These cards are secured credit cards and, in case of any default, the banks can use these fixed deposits to recover the credit card dues. Once you have this secured credit card, you should create track record of paying the bills on time. This will help you create a payment track record with the bank and the bank will report the same to CIBIL. Once these payments are reported to CIBIL, you will have a track record with CIBIL.

Getting an unsecured credit card or an unsecured loan will be easier for you once you have a sufficiently long payment track record of at least 12 months. Please make sure you keep on making some purchases through the credit card every month and paying the bill on time. The amount can be small but it should be regular. This would create a track record for you with CIBIL and now the banks would know that you pay off your credit card dues regularly.

Taking out a loan against gold

Another method of building a track record is to take out a loan against gold. However, while applying for a loan make sure it is secured from a bank and not a nonbanking financial institution to make sure tat the repayment is reported to CIBIL.

However, this method will create liquidity with you which you may not need. Thus, you should try this method in case you want to take a personal loan but you are not able to get one due to no payment track record with CIBIL. Once you have a proven track record with CIBIL, getting an unsecured loan or a credit card would become fairly easy.

The author is CEO of ApnaPaisa. The views expressed are her own

No positives in sight for markets this week
Arun Kejriwal

The markets behaved in a predictable fashion and alternated between rising and falling with losses on Monday, Wednesday and Friday and gains on Tuesday and Thursday.

The week ended with the Bombay Stock Exchange Sensex losing 676.08 points or 4.13 per cent to close at 15,695.43 points. The National Stock Exchange Nifty lost 195.75 points or 3.99 per cent to close at 4,710.05 points.

The broader indices like the BSE 100, BSE 200 and BSE 500 lost 3.65 per cent, 3.40 per cent and 3.30 per cent, respectively. The BSE MidCap lost significantly less at 1.82 per cent while the BSE SmallCap lost 2.15 per cent.

The big loser amongst the sectoral indices was the BSE Metal that lost 5.35 per cent. Within the metal index SAIL lost 12.27 per cent, JSW Steel lost 8.88 per cent, Hindalco lost 8.l16 per cent and Sterlite lost 7.53 per cent. Among other losers were Reliance Industries that lost 6.68 per cent, ICICI Bank (6.62 per cent) and Hero Honda (6.18 per cent).

Airline stocks were in the news with the government talking about foreign direct investment being permitted in civil aviation. This led to Kingfisher Airlines gaining 12.68 per cent while Jet Airways gained 9.38 per cent.

In other news listed firm SKS Microfinance’s founder Vikram Akula decided to step down as chairman & managing director, but that did not help the company’s stock that fell 11.68 per cent to close at Rs 108.10.

The Tata group selected Cyrus Mistry as its new chairman to take over from Ratan Tata and thus set at rest issues about succession in the group. Cyrus’s sister is married to Noel Tata who was tipped to become the chairman and he is the son of Pallonji Mistry of the firm Shapoorji Pallonji, which is the largest non-Tata shareholder of the holding company, Tata Sons.

The government cleared 100 per cent FDI in single brand retail and 51 per cent in multibrand retail and it is now up to the different states to allow such outlets in their jurisdiction. Foreign institutional investors were big sellers and sold stock worth Rs 5,322 crore in the week while domestic institutions chipped in with purchases of Rs 4,669 crore.

The Indian rupee continued its downward trend and closed the week at Rs 52.23.

The week just ended saw the expiry of the November series and it has been a big fall with the high during the month being 5,399.70 points on the NSE Nifty. The index closed for expiry at 4,756.45 points, losing almost 640 points or almost 12 per cent.

During the week the BSE Sensex hit a two-year low and reached levels last seen in November 2011. The fall saw the indices breaking the earlier lows made during October and August of the current year. The Sensex low of the year now is 16,478.69 and that of the NSE Nifty 4,639.10. These would be important levels to watch in the coming weeks.

The global scene continues to be grim and the eurozone crisis never ending. Even Germany appears to be having its shares of problems and during the last week an auction of bonds was nearly cancelled for want of takers. Italy has raised six-month debt at a staggering 6.5 during the week.

All this does not augur well for the stock markets. To add to the precarious condition in just about two to three weeks’ time fund managers globally will look forward to the much awaited Christmas and New Year holidays. The markets will closely follow European developments and react to any negative news.

Coming to Indian markets next week, we have seen the backbone being broken and also the low of the year was broken in the process. The week ahead will be choppy and there would be sharp intraday moves that will neutralize the same on a weekly basis. The net change at the end of the week may not be significant but there would be a hint of a negative bias in the markets.

The BSE Sensex has support at 15,597, then at 15,455, then at 15,351, then at 15,207 and finally at 15,024 points. It has resistance at 15,842 points, then at 16.087, then at 16,168, then at 16,371 and finally at 16,664 points.

The NSE Nifty has support at 4,679, then at 4,607, then at 4,538, then at 4,454 and finally at 4,360 points. It has resistance at 4,751, then at 4,828, then at 4,875, then at 4,985 and finally at 5,045. The markets are likely to be choppy with a negative bias this week.

The author is founder of KRIS, an  investment advisory firm. The views expressed are his own